Stock investors always have fear of a stock market crash. With more accessible information and news, stock investors have to always stay alert, since the smallest information can always affect the stock market. To successfully making money during a stock market crash here is the old rules you have to consider. These rules have not changed in the past and seem not likely to change in the future.
Buy into good business
The shares of good businesses always promise real profits and attractive return in equity. Besides, these businesses also have shareholder-friendly management, low to moderate debt-to-equity ratio, and also some franchise value.
Therefore, during a market crash, they tend to hold better. They can also have a bigger possibility to make a recovery if the share price drop by 75% or more.
Follow a formula
You have to avoid buying a position when it is at a peak and selling it at the bottom. To do that, getting a dollar-cost average into and out of your position, get a fixed rate to buy and sell, and set amounts of money will help.
Sticking to a routine policy of the regular share liquidation and accumulation since you cat time the market.
Reinvest dividends
Reinvesting dividends can supercharge your dollar-cost averaging program. Many have proven that reinvesting dividends is the key to the overall wealth of those successful investors.
Avoid fees
Try to always use the low cost. You may think that those fees are insignificant. However, there is a big difference between gaining 7% and 85 on your money. Remember that cash from those differences can buy you another security.
Have a backup
The last strategy is to have backup cash generators and income sources when the market crash is coming. This is the most essential thing to cut your possible risk.
For this, you can consider using one of Warrant Buffet methods, Berkshire Hathaway Model. The method allows you to easily gather your first few million in net worth.
